The vacant halls of Washington's cavernous Union Station echo with the clang, scrape and rumble of crowbars, shovels and bulldozer-like loading machines that scoop debris into dump trucks. The air is thick with plaster dust and permeated by the acrid smell of cutting torches.

For the first time since the once-splendid railroad terminal was closed as a hazard five years ago, major reconstruction work is under way. Behind padlocked doors and barricades, demolition crews are ripping out obsolete fixtures, pipes and wiring. Soon, officials say, restoration will begin.

Under federal plans, the massive, decaying granite edifice, built in 1907 within sight of the Capitol, is to be renovated at a cost of nearly $140 million in federal and private funds.

The building, scheduled to reopen in 1987 or early 1988, will house a refurbished train station along with restaurants, movie theaters and shops.

Last week, federal officials announced an agreement designed to end government spending on the station after it reopens. Under the accord, private developers will pay the government at least $1 million a year in rent -- enough, officials said, to pay all outstanding debts and other costs.

During a stroll through the dim, chilly hallways one recent afternoon, Keith Kelly, who heads a nonprofit group overseeing the restoration, turned to William E. DuVall, a key construction official. "You can't believe the difference, Bill, with all of the junk out of here," Kelly said.

As the two men eyed the rubble-strewn passageways, they predicted a grand metamorphosis. "That is the mezzanine area where there will be a restaurant," said DuVall, pointing to a sooty chamber filled with dangling wires, ripped insulation and debris. Said Kelly, "It'll have tables looking right over here."

The gourmet restaurant planned at Union Station's southwest end would overlook the Capitol and fountains in Columbus Plaza. Today this prospective dining salon is marked by a sign: "WARNING TRASH CHUTE OVERHEAD." Through the chute, discarded hunks of metal and plaster are dumped.

The demolition work inside the building began early last month and is expected to be completed by March or April.

The $1.8 million job is being carried out by O'Rourke Construction Co., a major Cincinnati-based wrecking outfit.

Officials plan to hire a general contractor to start the renovation work by June.

Union Station was ordered shut in 1981 because of leaks in its roof and other deterioration. Officials termed the building unsafe.

Since then, railroad passengers have had to walk around the three-block-long structure to a separate terminal erected behind it.

At the time, the government already had invested $117 million in the project, stirring widespread controversy and criticism.

The monumental station had been converted into a National Visitor Center with a large slide-show pit in its main waiting room.

Two years ago, Secretary of Transportation Elizabeth Hanford Dole announced plans to restore the structure as a "vibrant" showpiece.

Planners say they hope to recreate the bustling atmosphere and elegance the terminal had in its heyday. Workers also are completing a long-unfinished parking garage behind it.

The building's stately, colonnaded exterior is to be preserved. In the interior, officials said, care has been taken to prevent damage to any historic ornaments, columns, marble floors and other structures during the demolition and reconstruction work.

"One of the things we've done is disassemble the old clock," said DuVall, who heads a construction team formed by Gilbane Building Co. and Sherman R. Smoot Co. to manage the project.

The elaborate clock has been removed from a wall and locked in the terminal's ornate Presidential Suite to ensure its safety.

Kelly, executive director-president of the Union Station Redevelopment Corp., the federally backed agency overseeing the renovation, gazed at the building's gilded arches, where new lighting and air ducts were being tested.

None of these fixtures seemed suitable, he said, and others must be devised.

Workers, wearing masks as a safeguard against the dust-filled air, largely have finished clearing debris from the building's upper stories, where a series of offices is planned beneath broad skylights.

Crews are removing unwanted dry wall coverings on the main floor to reveal old granite columns.

In the central hall, the controversial pit was heaped with a jumble of twisted metal.

Soon, officials said, the pit will be hidden beneath concrete and covered with a white and red marble floor designed to match the station's historic decor. CAPTION: Picture, During Union Station's $140 million reconstruction, slated for completion in 1987 or realy 1988, care is taken to preserve historic structures. The Washington Post